The Economic Survey Report 2023 point out the significance of new Export Credit Guarantee Corporation (ECGC) policies to support Indian Exporters and the expectational changes by the 2023 Budget.
The Export Credit Guarantee Corporation (ECGC) supports Indian exporters and banks by providing export credit insurance services. ECGC provides insurance cover on the export consignment to protect exporters from the consequences of the payment risks.
It provides Export Credit Insurance to Banks (ECIB) to protect the Banks from losses on account of export credit given to exporters due to the risks of insolvency and/or protracted default of the exporter borrower.
The new scheme launched in July 2022, under its ECIB products, has the enhancement of the mechanism of insurance cover to banks providing pre-shipment and post-shipment financeto 90 per cent from an average coverage of 70 per cent for accounts with an export working capital limit of up to X20 crore to support small exporters.
The Indian exporters, undertaking exports of goods and services through this mechanism, shall be paid the export proceeds in INR from the balances in the designated Special Vostro account of the correspondent bank of the partner country as per the international settlement in INR.
This framework could largely reduce the net demand for foreign exchange, the US dollar in particular, for the settlement of current account-related trade flows. Further, the use of INR in cross-border trade is expected to mitigate currency risk for Indian businesses.
The Key aspect of this was that it could assist Indian exporters in getting advance payments in INR from overseas clients and in the longer term promote INR as an international currency once the rupee settlement mechanism gains traction.
The Survey after analysing the past year’s policies observed that if the INR turnover rises to equal the share of non-US, non-Euro currencies in global forex turnover of 4 per cent, INR could be regarded as an international currency, reflecting India’s position in the global economy.
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